Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. Market leaders have certainly capitalized on rising interest rates and strong loan demand to boost profitability, helping fuel a 15.1% gain for the banking industry over the past six months - 11.1 percentage points higher than the S&P 500.

Regardless of these results, investors must exercise caution as many banks are sensitive to interest rate fluctuations and economic cycles. On that note, here are three resilient bank stocks at the top of our wish list.

ServisFirst Bancshares (SFBS)

Market Cap: $4.34 billion

Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE: SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.

Why Could SFBS Be a Winner?

1. Market share has increased this cycle as its 17.5% annual revenue growth over the last two years was exceptional
2. Net interest margin increased by 53.2 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
3. Impressive 13.1% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle

At $79.47 per share, ServisFirst Bancshares trades at 2.1x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Popular (BPOP)

Market Cap: $9.75 billion

Founded in 1893 as the first bank in Puerto Rico to serve the working class, Popular (NASDAQ: BPOP) is a financial holding company that provides retail, mortgage, and commercial banking services primarily in Puerto Rico and the mainland United States.

Why Are We Positive On BPOP?

1. Net interest margin increased by 57.2 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Balance sheet strength has increased this cycle as its 20.4% annual tangible book value per share growth over the last two years was exceptional

Popular’s stock price of $152.13 implies a valuation ratio of 1.4x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.

1st Source (SRCE)

Market Cap: $1.79 billion

Tracing its roots back to 1863 during the Civil War era, 1st Source Corporation (NASDAQ: SRCE) is a regional bank holding company that provides commercial, consumer, specialty finance, and wealth management services across Indiana, Michigan, and Florida.

Why Do We Like SRCE?

1. Net interest margin expanded by 66.4 basis points (100 basis points = 1 percentage point) over the last two years, providing additional flexibility for investments
2. Share repurchases have increased shareholder returns as its annual earnings per share growth of 12.7% exceeded its revenue gains over the last five years
3. Balance sheet strength has increased this cycle as its 9.4% annual tangible book value per share growth over the last five years was exceptional

1st Source is trading at $74.40 per share, or 1.3x forward P/B. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

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